The US Securities and Exchange Commission (SEC) issued a report card that labels the enforcement actions undertaken in 2023 as impactful. The report labels 2023 as a highly productive year, particularly for the enforcement actions targeting digital assets and crypto-related projects.
The SEC’s chair, Gary Gensler, acknowledged the tremendous growth realized by the crypto markets. SEC indirectly noted the speculation regarding its approval of spot Bitcoin exchange-traded fund (ETF) was fuelling the crypto rally.
SEC Reiterates Commitment to Safeguard Investors and Enhance Public Trust in Crypto
Nonetheless, Gensler decried rampant misconduct also witnessed in the crypto markets, hence necessitating enforcement action. SEC’s director of the enforcement division, Gurbir Grewal, declared the regulator’s devotion to safeguarding investors and enhancing the public trust in the digital assets markets.
Grewal commends the SEC’s impactful action undertaken to reign in investors’ exploitation. The enforcement director hailed the SEC for portraying a sense of urgency in deploying its toolkit to mitigate misconduct in the digital assets industry.
The Tuesday, November 14 report outlined that SEC deployed its comprehensive toolkit to resolve the emergent cases. The report outlined an impactful use of risk-based initiatives, protecting whistleblowers and rewarding cooperation. The securities regulator hails the return of nearly $1 billion to aggrieved investors.
SEC report card for fiscal year 2023 details that the regulator initiated over two dozen enforcement actions involving crypto assets and securities. The number represents a significant spike in the enforcement than prior years. The figure is illustrative of the SEC’s heightened devotion to policing the cryptocurrency industry.
Gensler profiled the SEC as the federal cop on the beat, referencing the statistics of its involvement in holding wrongdoers in the crypto sector accountable. The report outlined the SEC’s filing charges against leading crypto firms, executives and influencers for their involvement in fraud non-registration of asset offerings and exchanges.
Ex-FTX CEO Bankman-Fried Guilty of Crypto-related Fraud
SEC outlined the landmark cases initiated in 2023, including the charges levied against ex-FTX founder Sam Bankman-Fried. The jury found Bankman-Fried guilty of all seven accounts early this month as he oversaw the crypto exchange collapse in November 2022.
SEC filed charges against Terraform Labs and Do Kwon for reportedly defrauding billions of dollars from unsuspecting investors. The report outlined additional litigated charges brought against Richard Heart for fraud orchestrated via three entities, namely Hex, PulseChain, and PulseX.
Gensler observed that the tremendous growth witnessed in crypto markets made investors who fear missing out on viable and profitable easier targets of fraudsters. The awareness necessitated the SEC to vigorously pursue enforcement actions to weed out wrongdoing and safeguard investors within the crypto space.
The agency’s report listed charges brought against leading crypto companies as an impactful remedy. Tuesday’s report lists Celsius, Gemini, Nexo, Kraken and Genesis as firms charged in 2023. SEC acknowledges that Nexo and Kraken settled their civil penalties of $30M million and $22.5M, respectively.
SEC announcement on 2023 results reveals that bad actors in the non-fungible token (NFT) space were among the 784 enforcement actions filed. It levied charges against Impact Theory LLC and Stoner Cats 2 LLC, alleging illegal operations and unregistered crypto-asset offerings.
Enforcement Actions to Eradicate Nondisclosure in Celebrity Endorsement
The agency took credit for the enforcement actions against celebrities endorsing various crypto projects. The scrutiny of celebrity endorsement led to the charging of reality TV star Kim Kardashian for alleged routing of crypto assets within their social media accounts.
The agency indicated that she failed to disclose the compensation received for endorsing the crypto project. Kardashian settled $1.26 million, while NBA Hall of Fame Paul Pierce paid $1.35m of similar charges.
The SEC opened charges against various celebrities endorsing and touting crypto projects, including Lindsay Lohan, Aliaune Thiam (Akon), Miles Parks (Lil Tachty) and Shaffer Smith (Ne-Yo). SEC name-dropped YouTuber Jake Paul Soulja Boy (DeAndre Cortez) and Kendra Lust in the endorsement list.
The enforcement actions undertaken against wrongdoers in crypto-related activities led to $5 billion in financial remedies.
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